Editing Bootstrapping (section)

=== Business ===

[[Bootstrapping (business)|Bootstrapping in business]] means starting a business without external help or working capital. Entrepreneurs in the startup development phase of their company survive through internal cash flow and are very cautious with their expenses.<ref>{{cite web|url=https://venturebeat.com/2008/11/20/the-art-of-the-bootstrap/|title=The art of the bootstrap|date=21 November 2008|access-date=23 June 2018}}</ref> Generally at the start of a venture, a small amount of money will be set aside for the bootstrap process.<ref name="Bootstrap">{{cite web|url=https://sethgodin.typepad.com/files/8.01.bootstrappersbible-1.pdf |archive-url=https://ghostarchive.org/archive/20221009/https://sethgodin.typepad.com/files/8.01.bootstrappersbible-1.pdf |archive-date=2022-10-09 |url-status=live|title=The Bootstrap Bible|last=Godin|first=Seth|access-date=23 June 2018}}</ref> Bootstrapping can also be a supplement for [[econometric]] models.<ref>{{cite journal|author=J. Scott Armstrong|year=2001|title=Judgmental Bootstrapping: Inferring Experts= Rules for Forecasting|url=http://marketing.wharton.upenn.edu/documents/research/Bootstrapping%5b1%5d.pdf|journal=Principles of Forecasting: A Handbook for Researchers and Practitioners|publisher=Kluwer Academic Publishers|access-date=2012-01-10|archive-url=https://web.archive.org/web/20100620222012/http://marketing.wharton.upenn.edu/documents/research/Bootstrapping%5B1%5D.pdf|archive-date=2010-06-20|url-status=dead}}</ref> Bootstrapping was also expanded upon in the book ''Bootstrap Business'' by Richard Christiansen, the Harvard Business Review article ''The Art of Bootstrapping'' and the follow-up book ''The Origin and Evolution of New Businesses'' by Amar Bhide. There is also an entire [[bible]] written on how to properly bootstrap by [[Seth Godin]].

Experts have noted that several common stages exist for bootstrapping a business venture:

# Birth-stage: This is the first stage to bootstrapping by which the entrepreneur utilizes any personal savings or borrowed and/or invested money from friends and family to launch the business. It is also possible for the business owner to be running or working for another organization at the time which may help to fuel their business and cover initial expenses.
# Funding from sales to consumers-stage: In this particular stage, money from customers is used to keep the business operating afloat. Once expenses caused by normal day-to-day business operations are met, the rate growth usually increases.
# Outsourcing-stage: At this point in the company's existence, the entrepreneur in question normally concentrates on the specific operating activities. This is the time in which entrepreneurs decide how to improve and upgrade equipment (subsequently increasing output) or even employing new staff members. At this point in time, the company may seek loans or even lean on other methods of additional funding such as venture capital to help with expansion and other improvements.

There are many types of companies that are eligible for bootstrapping. Early-stage companies that do not necessarily require large influxes of capital (particularly from outside sources) qualify. This would specifically allow for flexibility for the business and time to grow. [[Serial entrepreneur]] companies could also possibly reap the benefits of bootstrapping. These are organizations whereby the founder has money from the sale of a previous companies they can use to invest.

There are different methods of bootstrapping. Future business owners aspiring to use bootstrapping as way of launching their product or service often use the following methods:
* Using accessible money from their own personal savings.
* Managing their working capital in a way that minimizes their company's accounts receivable.
* Cashing out 401k retirement funds and pay them off at later dates.
* Gradually increasing the business' accounts payable through delaying payments or even renting equipment instead of buying them.

Bootstrapping is often considered successful. When taking into account statistics provided by Fundera, approximately 77% of small business rely on some sort of personal investment and or savings in order to fund their startup ventures. The average small business venture requires approximately $10,000 in startup capital with a third of small business launching with less than $5,000 bootstrapped.

Based on startup data presented by Entrepreneur.com, in comparison other methods of funding, bootstrapping is more commonly used than others. "0.91% of startups are funded by angel investors, while 0.05% are funded by VCs. In contrast, 57 percent of startups are funded by personal loans and credit, while 38 percent receive funding from family and friends."<ref>{{Cite web|last=Entis|first=Laura|date=2013-11-20|title=Where Startup Funding Really Comes From (Infographic)|url=https://www.entrepreneur.com/article/230011|access-date=2020-12-18|website=Entrepreneur|language=en}}</ref>

Some examples of successful entrepreneurs that have used bootstrapping in order to finance their businesses include [[serial entrepreneur]] [[Mark Cuban]]. He has publicly endorsed bootstrapping claiming that "If you can start on your own … do it by [yourself] without having to go out and raise money." When asked why he believed this approach was most necessary, he replied, "I think the biggest mistake people make is once they have an idea and the goal of starting a business, they think they have to raise money. And once you raise money, that's not an accomplishment, that's an obligation" because "now, you're reporting to whoever you raised money from."<ref>{{Cite web|last=Huddleston|first=Tom Jr.|date=2019-10-11|title=Mark Cuban: This is the 'biggest mistake' people make when starting a business|url=https://www.cnbc.com/2019/10/11/mark-cuban-biggest-mistake-people-make-when-starting-a-business.html|access-date=2020-12-18|website=CNBC|language=en}}</ref>

Bootstrapped companies such as Apple Inc. (APPL), eBay Inc. (EBAY) and Coca-Cola Co. have also claimed that they attribute some of their success to the fact that this method of funding enables them to remain highly focused on a specific array of profitable product.

[[Startup company|Startups]] can grow by reinvesting profits in its own growth if bootstrapping costs are low and return on investment is high. This financing approach allows owners to maintain control of their business and forces them to spend with discipline.<ref>{{cite web|url=https://vimeo.com/86337488|title=Bootstrapping in Entrepreneurship - Karl T. Ulrich|last=Ulrich|first=Karl|date=10 February 2014|via=Vimeo|access-date=23 June 2018}}</ref> In addition, bootstrapping allows startups to focus on customers rather than investors, thereby increasing the likelihood of creating a profitable business. This leaves startups with a better [[exit strategy]] with greater returns. 

[[Leveraged buyout]]s, or highly leveraged or "bootstrap" transactions, occur when an investor acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage, i.e.&nbsp;borrowing by the acquired company. 

[[Operation Bootstrap]] (''Operación Manos a la Obra'') refers to the ambitious projects that industrialized [[Puerto Rico]] in the mid-20th century.